Defense Inventory:

DOD Could Better Manage Parts With Limited Manufacturing Sources

NSIAD-90-126: Published: Aug 16, 1990. Publicly Released: Sep 18, 1990.

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Pursuant to a congressional request, GAO reviewed the Defense Logistics Agency's (DLA) efforts to manage spare and repair parts with limited manufacturing sources, under the Department of Defense's (DOD) Diminishing Manufacturing Sources and Material Shortages Program.

GAO found that: (1) the military services had not adequately implemented the DOD program policy to ensure that its objectives were being accomplished; (2) diminishing-source parts valued at $279 million in 1989 represented 100-percent growth since 1985, mainly because DLA reclassified existing stocks to diminishing-source status; (3) life-of-type buys were not always an accurate prediction of projected needs and would sometimes result in too much stock; (4) DLA had not determined its requirements for long-term storage of diminishing-source stock; and (5) DLA did not know the quality of stored parts.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DESC testing resources have been increased and within 18 months more testing should be possible.

    Recommendation: The Director, DLA, should direct DESC to establish a program to periodically test samples of on-hand diminishing sources parts to evaluate the quantities of stock in inventory.

    Agency Affected: Department of Defense: Defense Logistics Agency

  2. Status: Closed - Implemented

    Comments: DLA will issue instructions to depots to emphasize proper storage. DOD pointed out that determining the required level of protection was hard due to lack of standards.

    Recommendation: The Director, DLA, should direct the Defense Electronic Supply Center (DESC) to determine which parts need special long-term storage protection, ascertain what protection is required, and provide it as necessary.

    Agency Affected: Department of Defense: Defense Logistics Agency

  3. Status: Closed - Implemented

    Comments: DOD believes that the existing guidance cannot be made more specific because the "buys" are calculated on a case-by-case basis. GAO disagreed.

    Recommendation: The Director, DLA, should direct the Defense Electronics Supply Center to issue adequate guidance for its item managers to ensure correct calculations of the quantity when making life-of-type buys.

    Agency Affected: Department of Defense: Defense Logistics Agency

  4. Status: Closed - Implemented

    Comments: A DOD ad hoc working group developed an action plan and the plan is currently being implemented.

    Recommendation: The Secretary of Defense should direct the services to: (1) properly implement DOD policy to provide oversight of the program; and (2) develop parts requirements for those with diminishing sources based on past usage and valid projections of future needs.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: DOD plans to ask the Inspector General to follow-up if steps identified in the DOD action plan are not implemented in a timely manner. Services are currently implementing the action plan.

    Recommendation: The Secretary of Defense should request the DOD Inspector General to follow up on each of the services' actions and proposals to determine whether the services are providing adequate management of the program.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: DESC has developed a capability to test parts on receipt. Testing will be expanded within resource limits.

    Recommendation: The Director, DLA, should direct DESC to ensure that the quality of parts is satisfactory through quality assurance tests or other means before it accepts them.

    Agency Affected: Department of Defense: Defense Logistics Agency

 

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